2 Must Buy Shares

It’s September 2018, a rare occasion where 2 companies from the top ten largest global companies (by market capitalisation) trading at more than 30% discount from its peak (52 weeks). I highly recommend these two must buy shares NOW before they break away into the $250 mark by 2020. These two companies are still seeking growth and expansion to various business and market.

Yes, I am recommending these shares for long-term investment, preferably in your millionaire stocks and shares portfolio. Would also highly recommend for your kid’s stocks and shares portfolio.

Let’s not waste time and focus on these two amazing companies.

Why so Cheap?

Facebook was at a peak high of $217.50 in July 2018 and the shares fell almost 20% in a single day. It was due to lower estimated earnings at a higher operating cost. The increase in cost was to fix the broken system scandal which hit 87 million users in the Q2 2018. Facebook is basically the toxic stock on the wall street today. Short term seller thinks Facebook days are numbered.

These two companies shares are trading at more than 30% discount, however, the future of the business is still focused on customer driven-business growth.

Future Growth

As a user, do you noticed you have spent more time on FB, IG and WhatsApp on your daily routines? Last 18 months, many users have been shopping, selling and watching more videos than previous Amazon, eBay and Youtube.

Facebook is integrating the whole experience into one platform silently allowing users to evolve to its requirements.

As a business, FB is seeking earnings for more forms of social, live sports, e-sports, game streaming and eventually spending money on the platform. FB ultimate goal is to make money from all parties (Customers, Marketers, Sponsors, Movie production and Online Vendors).

Ali Baba seems to be everywhere but not much presence in Europe. Recently, I’ve seen AliPay, AliExpress parcels and Ali Baba sponsored movies. The company is slowly expanding its roots like a journey to the west.

With the recent announcement of support and assistance to help develop the Russian and India logistics. Yes, Ali Baba is venturing into undeveloped e-commerce areas which Amazon have failed.

Cloud computing and Large Data analysis are being a focus at the moment to plant a foundation into the future plans. We have to wait and see how this intelligence can evolve into a consumer level goods and service.

Financial Analysis

Facebook

PE Ratio

Facebook is currently sitting at its lowest PE ratio of 25. In 2016, FB was trading >60 times. In 2017 >37times.

As a long-term investor, you know you are paying a fairer value compared to the last two years.

Profit Margin

FB seems to almost double its revenue every year. Wall Street is concern with the slowing net profit with higher expenditure.

As a long-term investor, you should focus on the profit margin of 39%. (Apple=21%, Amazon = 2%)

Debt Level

Yes, Facebook has no Debt. No interest on payment which decreases their profit margin.

As a long-term investor, you can rest assure FB have the cash flow to buy up smaller companies for quicker expansion anytime.

Ali Baba

PE Ratio

Baba is hovering at PE ratio of 46, more than two times higher than in 2016.

As a long-term investor, do you know Ali Express is only 1% revenue for the company. Earnings are expected to grow year after year with 2018/2019 expansions.

Revenue/Cash

Baba racked in nearing $250bn in 2018 and Amazon only manage under $180bn.

Baba has cash reserves of $55bn. Amazon has a cash reserve of $1.19bn only.

As a long-term investors we know cash is king.

Growing Expenses

With increasing revenue, comes at increasing operating expenses.

Baba is spending on IT infrastructure to reduce cost on paying other companies such as CRM. A company who learns and hires the best people to built the foundation platform.

Matrix Analysis

Final Words

If FB and BABA were trading above $210 today, I would not be writing this blog today. As explained in my previous article on the ‘Easiest & Hardest Stock Strategy’; its never easy to buy low, because we are full of fear and negativity. Filter out all the media and reports and just focus on the business alone.

Are FB and BABA going bust? Are they no longer growing? Will you see your kids and grandchildren using these two companies goods and services?

In 2020, you will be reading this article and realising you should have bought more shares from these two amazing companies at such a discounted price. I was the same in 2016 when Apple was hovering under $100 because the investors think it was the end of the era. Two years later the company doubled in size and became the first $1trn value company. Quality and Integrity together cannot be toppled.

I would personally buy both shares at $160. If it drops lower (150 and 140), then buy in stages to level out the average. Lets focus on the long term prospects.

MOOMOOCOO DISCLAIMER

MooMooCoo.com is an economic and financial blog strictly for information only. Any financial action taken by the reader and visitors are not responsibility of MooMooCoo.com. Please understand that there is always a capital risk in any form of investments which differs greatly from savings.